Hedge Fund Sues AkzoNobel Over Chair

Elliott Advisors, an arm of investor Paul Singer’s Elliott Management, is now the largest shareholder of coatings manufacturer AkzoNobel, and is attempting to force out Antony Burgmans, chair of the coatings maker’s supervisory board.

AkzoNobel

AkzoNobel refused to go to the bargaining table with PPG Industries through three merger proposals this spring; activist hedge fund Elliott Management, now the company's biggest shareholder, is filing suit alleging the company was not responsive to shareholders.

The suit comes in the wake of the Amsterdam firm’s denial of a months-long merger bid by PPG Industries (Pittsburgh), of which Burgmans and AkzoNobel CEO Ton Büchner were key figures.

Two Suits

According to Reuters, Elliott has initiated action in the Interim Relief Court in Amsterdam, in a suit that’s separate from another it already filed against AkzoNobel in the Enterprise Chamber Court of the Netherlands. The new suit will be heard “within several weeks,” according to the news agency, while the first suit won’t be heard until September.

Elliott first moved to oust Burgmans in April, when the firm reportedly owned only a 3.25-percent stake in the coatings company. Elliott was dissatisfied with AkzoNobel’s unwillingness to go to the bargaining table with PPG; the company repeatedly denied PPG’s offers, which began in March, without negotiation.

Elliott Advisors is part of Elliott Management, founded by billionaire investor Paul Singer.

Elliott moved to convene an extraordinary general meeting of shareholders, on the topic of removing Burgmans as chair. AkzoNobel expressed its support of Burgmans at the time, and denied the request.

“The view of the Supervisory Board is that the removal of Mr. Burgmans would be irresponsible, disproportionate, damaging and not in the best interest of the company, its shareholders and other stakeholders,” the company said in a statement in April. “Therefore the proposed agenda item to remove Mr. Burgmans will be rejected.”

Burgmans was first appointed to AkzoNobel's supervisor board in 2006. He is a former chairman of the Dutch-British consumer-goods giant Unilever NV.

Shareholder Democracy Concerns

According to Reuters, Elliott filed the suit in an attempt to assert its dissatisfaction with AkzoNobel’s handling of the PPG proposals.

"Elliott finds Chairman Burgmans’ views on shareholder democracy to be archaic and wholly unacceptable in today’s capital markets," the firm reportedly said in a statement. "A board which holds itself accountable to no one is not an appropriate governance paradigm. If shareholders are not able to regulate the conduct of Akzo Nobel's boards, who can?"

AkzoNobel did not immediately respond to a request for comment on the suit Friday (July 7) but told Reuters that the company has "had more than 130 contacts with shareholders in June, seeking feedback."

PPG made three official merger offers, the final worth about $28.8 billion, before officially withdrawing its bid at the beginning of June. According to Dutch law, the company may not make another offer for at least six months.